Ep. 39 - Starting & Remaining Small: The Case for Anti-Growth

We’ve been witnessing a parabolic rise in the relentless pursuit of Growth. Investor’s are continually forecasting and analyzing growth in an array of manners. It can be spread across different facets of time - days, weeks, months, quarters, years. The criteria plotted against these time horizons range from customer acquisition, top-line revenue, bounce-rate, and even machine shut-down hours. Everything is based on Growth. Investors are willing to finance growth operations of a company for decades, while holding a slim hope of profitability one day in the future.

However, the chances of your company (or mine) becoming the next unicorn [AKA company valued at > $1B] is about 1:100. And that’s generous.

Venture capital firms like a16z and Tiger Global don’t care if 99% of the companies they invest in fail. As long as one does a 1000x then they’ve made their money. They’re chasing grand slams. And with that chase comes a disregard for sustainability and profitability.

We now hear these ‘humble’ brags; “I raised $50m at a $1b valuation - Tiger led the round.” But this founder has just lost major equity, their job is now mainly a fundraiser and promoter, and no longer a creator. The venture capital route can also take years or decades to realize the fruits of your labor (if at all).  

However, I believe there is a different path that can be taken. One which doesn’t involve forgoing equity, hiring hundreds of people, and ‘hoping’ you’re the one percent that makes it.

Rather, just start and remain small.

Start Small.

One of the best ways to start a business or side project is by scratching your own itch. Building, or doing something that you’d use, or you’ve verified is in high-demand. This will ensure two things; 1) if you’re scratching your own itch it means that you’ll be a customer. So at the very least you’ve built a product/service that you’ll use; and 2) If you’ve verified it’s in high-demand then the down-side is limited, and you’re not just creating something.

Starting and remaining small also gives you the power to change and reiterate versions consistently. No politics, no meetings, and no board approval.

Optionality.

Remaining small increases your optionality. Companies with investors, lenders, employees, board of directors, advisors, and suppliers are sticky. It's challenging for a company of significant size to pivot quickly and effectively. However, remaining small keeps you nimble. It allows for quick tweaks in product design or code without you having to receive agreement from numerous stakeholders.

Further, you can just stop. If you're a solomaker or solopreneur you can just stop. Sure, your customers may be disappointed, but that's about it. Large, venture-backed companies cannot stop. I'd argue this is where the majority of depression and anxiety lies within entrepreneurship - those individuals who are trapped by their own company. You set out to be your own boss, but now you have more 'bosses' than ever.

Remain small = Increase in Optionality.

Lifestyle Design + Income.

As a solopreneur/maker there is a low-chance in becoming a billionaire or reaching nine-figures. For most people this is fine. Who really needs $1B or even $100M? But I do get the aspirational aspect of these numbers, and if this is the case then go raise a bunch of money and swing for the fence.

A better option (in my opinion) is earning mid-to-high six figures, while having the ability to design your life. It's very possible to earn between $20-100k/monthly as a solopreneur/maker, which for most people is plenty of money to support a healthy and fun lifestyle. One which allows you to do what you want, when you want. Your only bosses are your customers.

To remain in that range will test your ability to say no. Growth is enticing. And it sounds sexy. People tend to associate head-count with success. The first question most people ask me is typically - 'how many people are working for you right now?' And it feels good to say a high number, or a number higher than last time you saw them. But in reality it just doesn't matter.

Employees ≠  growth. Growth ≠ success.

Closing.

My hope for this is that people stop thinking of starting a business as this daunting, complex, and risky endeavour. I'd argue it's less daunting than people think, and actually less complex and less risky than holding a corporate career.

Start small and remain small. Don't let growth seduce you.